In trading on Friday, shares of Pfizer were yielding above the 6% mark based on its quarterly dividend (annualized to $1.68), with the stock changing hands as low as $27.85 on the day. Dividends play a crucial role for investors as they have historically contributed significantly to the stock market's total return.
For instance, if one had purchased shares of the S&P 500 ETF (SPY) on 12/31/1999 at $146.88 per share, by 12/31/2012, the value had decreased to $142.41 per share. However, dividends totaling $25.98 per share were collected during that period, resulting in a positive total return of 23.36%. Even with dividends reinvested, the average annual total return was approximately 1.6%. Therefore, a yield above 6% can be seen as attractive if sustainable.
Pfizer, being an S&P 500 company, holds a special status as one of the large-cap companies in the S&P 500 Index. Dividend amounts are not always predictable and are influenced by the profitability of each company. Analyzing the historical dividend chart for Pfizer can provide insights into the likelihood of the current dividend continuing and the reasonableness of expecting a 6% annual yield.
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